Rebooting the FDA

The White House wants to upgrade technology at the nation's hospitals. Perhaps it needs to start closer to home.

By Anna Kattan, contributor

Last Updated: April 3, 2009: 10:06 AM ET

NEW YORK (Fortune) -- One of the cornerstones of Washington's omnibus stimulus plan is $19 billion in spending on improved information technology systems in hospitals and other health
facilities throughout the U.S.

But former regulators and some drug-company executives think that some of that money should stay in Washington: Specifically, they think the tech systems at the Food and Drug
Administration (FDA) are in need of a major upgrade.

"We need to fund a total modernization of the FDA's information technology infrastructure and bring them into the 21st century," says Jeffrey Bauer, a Chicago-based medical economist of
ACS Healthcare Solutions.

The FDA is a vital player in sustaining a healthy economy: The agency regulates approximately a quarter of every consumer dollar spent in the U.S. annually, and it is responsible for
regulating a myriad of products including drugs, food, cosmetics, and vaccines.

But the agency has been stretched thin for years when it comes to staff and funding, according to former FDA employees.

What's more, the agency's reputation has been badly bruised by a slew of high-profile crises, including the recall of the anti-inflammatory drug Vioxx (rofecoxib) and the tainted blood
thinner heparin.

A modern IT system at the FDA would bolster drug safety, and could also improve the drug development process.

While the FDA is active in getting drugs to market, analysts say the agency is woefully ill-equipped to monitor drugs after they are approved. And they say good information technology
would help.

For years, the FDA has been unable to effectively carry out "post market" monitoring of drugs. The current system has two main flaws. It relies on healthcare professionals to voluntarily
report unusual side effects; the information the FDA does get isn't properly screened or analyzed electronically.

An up-to-date, digitized monitoring system for drugs already in the market would, in particular, allow the FDA to track products that demonstrate unusual patterns of side effects. Today
the FDA tries to keep drugs safe through tougher clinical trials, but those take place before the drug is in the market, and won't always catch adverse side effects. A modern electronic
system could uncover problems not detected during clinical trials. Simply sorting the database by categories of symptoms and medication could yield interesting statistics for the agency,
for example.

Additionally, the drug industry would benefit enormously from a large public database. Access to the information would give companies added insight on how drugs affect patients, what to
test for, and whether certain safety issues can be avoided. A robust electronic safety system could also lead to more fruitful interactions between the FDA and the drug industry.

"If they (FDA) had a very clear set of standards that they used in their system, it would be a tremendous incentive for us and other sponsors to actually adopt the same set of standards,"
says Trevor Mundel, the Global Head of Development at Novartis Pharma (NVS).

Indeed, the FDA has already taken initial steps toward a postmarket monitoring system. Last year, the agency launched an initiative aimed at creating an electronic data system to measure
the safety and effectiveness of drugs on the market. The initiative is a joint effort between public and private sectors and would give the agency access to existing data sources, such as
electronic health record systems. According to the FDA, the goal is to enter 25 million patients in the system by 2010, and 100 million by 2012.

But the initiative needs more funding to become a reality, critics say.

Under the President's budget blueprint, the Department of Health and Human Services (the FDA's umbrella organization), is scheduled to receive $76.8 billion. The FDA is also set to get a
substantial boost in funding to improve the safety of food and medical products. However, few details have been released on exactly how the money will be used, and a spokesperson said
only that the agency would not be receiving any of the funding from the stimulus package.

Experts say investing in a drug safety monitoring system would certainly be a solution to rising health care costs.

"The less we know about safety, the higher health care costs will become because more people are taking drugs that end up creating safety problems. So it is not a hard argument that we
should be investing in something that could very likely reduce overall healthcare spending," says Dr. Kenneth Kaitin, director of Tufts Center for the Study of Drug Development.

The FDA did get some good news recently. In March the Obama administration tapped Dr. Margaret Hamburg, the former New York City Health Commissioner, to head the agency. For the past
decade, the FDA has been without a permanent commissioner for at least half of the time - a situation that has surely contributed to the agency's problems. Stable leadership could help
the FDA stand up for the financing it needs to do its job. That could be the key ingredient for keeping drugs safe and their development costs in check.